Experts cite several factors for proliferation of discount stores in HD

Monday

Feb 24, 2014 at 7:53 AMFeb 24, 2014 at 8:15 PM

Shea Johnson, Staff Writer

Boasting at least 30 major chain discount stores — including Wal-Mart, 99 Cents Only Stores, Dollar Tree, Dollar General, Big Lots and Family Dollar — the Victor Valley and Barstow fit the mold for value-oriented retailers, which remain the most active in the market amid a recovering economy, a local broker says.

While the High Desert's median household income sits below the state average, there are more factors that may explain why the sprawling region has been an attractive landing pad for these low-cost shops.

"They're the most active retailers in the market because they have a model that isn't affected by Internet sales," said Brad Umansky, president of Rancho Cucamonga-based Progressive Real Estate Partners. Umansky has brokered deals with discount stores in Barstow and Hesperia.

Umansky said another reason is that the area possesses a wide expanse of inexpensive land.

According to a year-end market report by CoStar Group, the High Desert maintains a lower cost per square foot for general retail space than any of the seven sub-regions in the Inland Empire.

And the High Desert provides more room to build than the Inland Empire's valleys. Umansky says availability of land is a key factor for discount stores, which can't afford to pay for pricier and more sought-after existing shop space while selling their products at the low prices they offer.

Colleen Butcher, principal broker at RavenTek Realty in Apple Valley, says population density generally dictates where the non-value and value-based stores are built.

Butcher points to Jess Ranch in Apple Valley as being the highest-density area in the High Desert. She says that discount stores are different than higher-end businesses in that they don't necessarily rely on centralized, heavy traffic. Instead, they essentially become a service provider to families — even those in far less dense outskirts — to get the essentials they need.

Butcher, who is also the chairwoman for the Inland Empire branch of International Council of Shopping Centers, also spoke of an evolving Hispanic demographic when explaining discount stores' local success. She will present further information on March 6 at the Inland Empire Hispanic Markets Program and Reception in Rancho Cucamonga.

"There was some demographics done by the Pew Institute," she said, "and they realized the astounding changes in the population in the U.S., and what is occurring in the Hispanic population."

According to a 2011 study by the center, there is a higher birth rate among women of the nation's largest ethnic minority (Hispanics) than any other group. As larger numbers of Hispanic children live amongst multi-generational families, Butcher said, the prevalent demographic obtains a particular buying power.

"The dollar stores become attractive for the Hispanic family," she said. "(The stores) are easy to get in and out of and provide good value for the families."

Butcher also said a local housing market on the upswing — she reported a 15 to 20 percent year-over-year increase in residential home sales across the Victor Valley — would bolster both non-value and value-based retail development.

Meanwhile, the Wal-Mart Supercenter on Highway 395 and Palmdale Roads is opening "soon," a Victorville city official said Thursday. He deferred questions about a specific date to a Walmart spokesperson who was not immediately available. The new Wal-Mart is one of two in the works for the city, while progress on the store near Spring Valley Lake remains stagnant due to litigation, officials said.

As each of the five main cities in the High Desert bear unemployment and poverty rates above the California average, it may be difficult to overlook a struggling local economy as a major force for the seeming proliferation of discount stores.

"I think there are more people in the High Desert that are price sensitive, which results in more discount stores being in that area," Umansky said, but he warned against singling out the area. "It isn't necessarily, by any stretch of the imagination, a High Desert phenomenon."

However, some High Desert shoppers say shopping at discount or dollar stores isn't as much as necessity as just good common sense.

Daniel Pollaccia, 31, of Apple Valley, says he shops at local dollar stores about once a week. A personal trainer, he says he likes to eat healthy and get the best deals on produce or nutrition bars he can find.

"It's hit and miss, but if it's timed right you can save quite a bit of money," Pollaccia said. "I buy produce sometimes, and yogurt, depending on the price."

Pollaccia touts that he's paid $1 each for jars of organic peanut butter that normally run for $4 a pop at big box grocery stores. When deals like that occur, he says he'll buy 20 to 30 of the same item at a time.

Diane Mariano, 25, of Victorville, says she likes to buy toys at the discount retailers for her 1-year-old son.

"Obviously, if you're on a budget, it helps a lot," Mariano said. "And he gets tired of toys so fast anyway, it doesn't matter that it's only a dollar." Mariano says she shops at the stores about once a month. She also likes to buy holiday decor or household necessities such as paper plates and cups. "We don't shop there a lot, but it's a good place to go to get necessities for cheap," Mariano said.

— Staff Writer Brooke Self contributed to this story.

Shea Johnson may be reached at 760-955-5368 or SJohnson@VVDaily Press.com.

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